In June 2023, 40% of U.S. banking assets were at the disposal of only three bank holding companies: JPMorgan Chase, Bank of America, and Citigroup. In 2023, the top ten United States banks owned 70 percent of U.S. bank assets, in contrast to 42% just twenty years ago. 1

Private bank consolidation is a cyclical pattern that eventually results in further consolidation of banks. The cycle begins with the excessive influence of the government and market control that creates an effect that cascades from high-risk investment strategies. This is followed by Federal Reserve intervention, which slows the economy until it collapses, at which point more consolidation occurs. On the ground, it is the American population. It is impacted by rates of interest rise and foreclosures on homes, massive unemployment, “too-big-to-fail” taxpayer bailouts and rent increases, inflation, banking deserts, communities in distress, forced predatory loans, and the continuing decline of the middle class.

The article in question is a part of the series that examines how Alexander Hamilton’s initial National Public Bank –the only institution based on U.S. Constitutional law–may provide us with an economically sound alternative as opposed to the current one, which is where private banks lease out loans concealed in the form of U.S. currency–and backed by an everlasting base of National debt. Then, it is further increased in leverage until it becomes too heavy that the effort of the American citizens cannot bear it. For this, they have to pay.

The concept of a National Public Bank solves the problem of private bank consolidation as it doesn’t make debt but instead gives labor a boost and thus generates value. There has never been value generated by debt. American labor has been the sole factor in the creation of value. Once it’s acknowledged as the gold standard of U.S. currency, there is no such thing as economic recessions or inflation or debt, distressed community foreclosures, food or bank deserts, poverty, ecological collapse, pollution, or any negative externalities created by the model of private banking.

Too-Big-To-Fail Dangers

The 2008-2007 Financial Crisis clearly illustrates the risks of relying on banks too big to fail. The resulting cost to American homeowners, taxpayers, employees, renters, small-business owners, and consumers continues to be significant. Between foreclosures, bailouts, jobs being lost to middle-income earners and rent increases, inflation, and further bank consolidation that eliminated community banking options for small-scale businesses in the local area and residents, Every American was liable for the cost of and for our monetary privatization system in exchange for their continued debts.

In essence, Wall Street is nothing more than a casino that, if classified as such, will only cause harm to those who choose to bet there. Through the guise of the federal government, Wall Street has successfully connected its economy, drained all the possible labor worth from the American people, and left trillions of dollars in loans, ensuring the labor of people powers the large private banks for the foreseeable future.

Overpowering Political Power

Many deregulations were required to cause the financial Crisis of 2007-2008. One thing the majority of Americans can agree on is that when politicians come together and discuss issues, nothing important to the average American gets completed; therefore when something is done in a specific way and completed quickly towards specific outcomes that benefit a particular party, It is in the best interest of ‘average Americans to at minimum–remember.

1913 was the first time Congress declared its privatization of Constitutionally authorized money power. This opened the doors to additional government-sponsored enterprises (GSEs) primarily to help launder privately-created debt. GSEs such as Fannie Mae borrow public debt to purchase private debt that is, in turn, derived from public debt. Under the glitz and glamour, the federal government is opening an avenue through which Wall Street investors receive a steady income stream from the labor value of middle- and low-income American homeowners, the only value generated by this tangled process.

According to some reports, money created “out of the air by banks is destroyed when it is repayable, leaving the interest paid on loan as the bank’s revenue; however, when GSEs purchase the loans and bundle them in vast collections of mortgage-backed securities, the investors benefit from the total worth of the re-purchase and receive both the interest and principal value. Imagine how much money was in the market, and was then seized by different kinds of economic rent and was rebranded as inflationary customary only after the following events took place:

• The Gramm-Leach-Bliley Act of 1999 allowed commercial banks to be reconnected with their investment counterparts. This allowed the commercial branch of the bank to issue loans. After the GSE secures the investment arm, the bank can package the bundles together and then market them. This meant that investment vehicles could be made virtually entirely in-house.’
• Through the Commodity Futures Modernization Act of 2000, the derivative gambling industry was legal and exempted from any oversight or supervision regulations. The inevitable result of derivatives was when investment and commercial banks were able to operate under the same structure; they could serve as a conduit for the mortgages of homeowners directly to the investors. Large-scale intermediaries, facilitators, and middlemen — this is where the money is easy to control the economic connections between sellers and buyers, establish a paywall, and charge a fee for each transaction that takes place instead of working to produce anything that has actual worth.
• The Securities and Exchange Commission lowered reserve requirements for the top five banks. Banks were able to increase their leverage at a ratio that could reach 40 times one that they could use to boost the origination of mortgages for homeowners—mortgage-backed securities with a low rating as well as collateralized debt obligations going like hotcakes. Furthermore, because GSEs were subject to at least a few federal regulations, they were inflicting much stress on this supply chain. The banks were now the sole source of this conduit for money, and big private banks pushed it up to the highest levels. Banks sought to protect their assets through the creation of non-regulated SPEs, or Special Purpose entities (SPEs )–“fenced organizations” filled with debt money that was over-leveraged, designed to provide loans without regulation to buyers who are typically not qualified Private-label securitization (PLS) by nonbank companies were responsible for nearly $2 trillion in subprime loans up to 2004 when the Crisis began to hit. 2
• The Federal Office of the Comptroller of the Currency cleverly disqualified states from regulating banks’ loan practices in the national economy to ensure that the large banks could put these non-regulated banks near significant housing markets, where they provided predatory variable-rate loans (with three to five-year balloon payments) to low-income first-time buyers of homes. The Special Purpose Entities then passed the loans directly to the parent company, who then bundled them into unregulated, unprotected derivatives and were awarded an AAA grade by an unnamed, unregulated credit rating company, which was then backed by a privately-owned insurance firm (AIG) which was not required to put aside reserves since derivatives could not be redeemed due because of the Commodity Futures Modernization Act. It’s a known fact that predators cooperate in their efforts to defeat larger prey, and even though some predators mistake that as competition, very rarely do prey view the situation in this way.

Then that was because it was the Federal Reserve who automatically raised rates by four percent in just two years to halt the rapid purchase of houses without bothering to look into the fact that $2 trillion, or 83% of these loans, were arranged by unregulated nonbank organizations who offered only adjustable rate loans that included balloon payments of three to five years to middle and low-income first-time buyers. When the housing bubble stopped, the Fed and the government reduced the interest rates to zero and intentionally sold the foreclosures to investors at the lowest asking price rather than taking action to ensure that Americans were at home. An investigation by the federal government discovered that private banks didn’t even try to ward off foreclosures. However, they made a concerted effort to purchase these homes in a manner that suggested this was the intention from the beginning. 

Lowered Competition in the Market

Due to the risk faced by various Wall Street Banks, some have been shut down. Their assets were amalgamated by the biggest banks, who are familiar with the capital and regulatory investment requirements that come with living over the asset threshold. A drastic reduction in A typically accompanies a decrease in competition) the pace of innovation, C) high-quality goods and services, and C) the employees’ wages; prices tend to be the only thing that goes up.

The 2017 Economic Growth, Regulatory Relief, and Consumer Protection Act is another instance of the Federal government saying that big private banks fighting against each other in some way promotes our overall welfare. In addition, the law increased the threshold for assets that banks must have from $50 to $250 billion. It also promises no oversight when it consolidates via mergers or acquisitions. The rationale was likely to ensure that the largest banks could not absorb everything they encountered. However, as we’ve observed in our U.S. Healthcare Services, even rival entities can join forces to slash public costs. The Financial Crisis also showed that large organizations, like banks, Credit Rating Agencies, and Insurance Companies, for example–will join forces to benefit from the safe gamble that people require shelter.

Middleweight banks are consciously cautious not to exceed the regulatory thresholds and be a part of the heavyweight division. The size of a bank is not a sign of expertise or quality but more a sign of avarice or gluttony. The worry of getting eaten alive resulted in a financial and psychological obstacle for medium-sized banks trying to improve their standing.

Limit Access

Small business lending usually requires local knowledge to assess the risks specific to a particular community. As a result, companies need help to secure loans from banks outside their community. If all but the smallest banks merge their operations, the focus has usually been shifted to lending to small companies; however, when lenders outside the local area choose to provide small-business loans, the rates are generally high.

Consolidation has also negatively affected the rural market, leading numerous smaller banks to consolidate to stay afloat, in the idea of helping ensure small business credit accessibility that larger banks have retreated. 

Big banks possess the funds to invest in mobile and digital technology, which is an attractive proposition for local customers. They can also provide their services at less than their competitors, who have less to offer. Smaller banks have benefited communities during tough times. Still, with the present pace, smaller banks won’t be available when the tough times arise. Since 2008, 17,000 branches have shut down, a decrease of 18% across the country. Rural communities and communities with low incomes have suffered the most. 

The large number of closings has made it challenging to apply legislation like the Community Reinvestment Act of 1977, enacted to stop unfair lending practices between private banks and encourage them to build and revive the communities they serve. When small banks began to disappear, people were forced to look for alternative sources, most of which are not regulated and frequently predatory, such as payday lenders and Auto loan title lenders or cashing stations for checks. 

Consolidation is mainly a result of bank mergers and acquisitions. Whenever M&As dominate market activity, small local banks go under, sometimes more than 200 a month (reached during the outbreak). Seven “banking deserts” have cut off individuals from financial aid in distressed communities.

Financial Contagion Risks

Like a virus, contagiousness spreads a crisis across the economy to other areas in close economic proximity. The banks of Germany, Belgium, the Netherlands, and Switzerland were impacted by our Financial Crisis by buying, packaging, and selling our toxic U.S. mortgage bonds in their respective countries. The banks then passed the contaminant to Ireland and Spain using similar credit techniques to support their non-sustainable actual housing expansions. In all instances, the psychological inclination of individuals to believe that they are in the best position resulted in the sequence of events that we call globally The Great Financial Crisis.

Large banks are parasites in nature and take advantage of the vitality of small communities and ecosystems. If they consume too much, communities (and even ecosystems) could collapse, taking the predator banks out of the process. National Public Banks perform the opposite role; they give the life of communities and not remove it. Thus, it is the responsibility of every American to examine this new financial structure in an in-depth look.

What Can a National Public Bank Help?

In the period leading up to the 2007-2008 Financial Crisis, Wall Street gambled with other people’s money, other people’s homes, other people’s savings, and other people’s livelihoods; the job of big private banks was to get even more significant, therefore–technically–big private banks were doing their job. The federal government’s job is to tax and spend money to improve the overall well-being of its citizens. Something that the federal government hasn’t found a way to do efficiently.

During the Great Depression of the 1930s, the government restored the national bank as a public institution; the HomeOwners’ Loan Corporation kept one million Americans living in their homes after being foreclosure-prone through private banks. In addition, when the government of 2008 allowed homeowners to fail, they let them sell their homes to Wall Street investment trusts, which gradually raised rents and fueled the subsequent inflationary frenzies Americans are currently experiencing as two-digit inflation.

The evidence is abundant. The evidence is clear: Each of the necessary changes required for private banks to wreck our economy was granted unconditionally to the government of America. In addition, none of these federal government decisions helped the American people’s general well-being, which equates to ‘taxation with no representation, an injustice that happened in the past 250 years and forced Americans to find a new form of representation. The people of the time were already aware that money was a speech, and they exercised their right to speak freely by restraining tax payments even when their general well-being was not being boosted. Modern economics tells us that to be paid, you must deliver the goods. Suppose people recognize that they must pay the government for services not provided. In that case, they will also realize that their money is leveraged.

The solution is easy: we cannot control what happens on Wall Street because we do not control it. We, however, control the federal government and pay it some of our earnings to help it promote our overall well-being. To fix the government so it can do its job, we must disconnect the hose of cash between the federal government and Wall Street and connect it instead to the Bank of the United States, also known as the Taxpayer’s bank. Then, taxpayer money flows through the National Public Bank and back to the taxpayers, promoting their overall well-being.

The federal government does not only have the constitutional power to set up its national bank but also the power to make and control the flow of money should it decide to take on its role in this field. Suppose the government can correctly connect the hose of taxpayer money to ensure that it returns to taxpayers and taxpayers. In that case, it is possible to reverse the power of money from being an instrument of oppression for humans towards one of empowerment for humans. 

Whatever tale is being promoted, humans are the primary source of value-creation; private money has the effect of transferring all the worth of our labor into the pockets of individuals, while public money can be utilized to increase the cost of human labor since it will put the money back into the pockets of the people who perform the work. The responsibility of the business sector is to support the general welfare. No amount of laws will alter this. Governments pay for our general welfare. We must keep them from outsourcing this task to any other company.

Public Banks Add Competition

A National Public Bank branch positioned in every town to meet the needs of people with low incomes and all the essential infrastructure for economic growth will result in a downward effect on inflationary strategies that are statistically triggered in the absence of competition.

Privatizing government duties is no longer essential; therefore, the work will not need to be outsourced. This also implies that taxpayer funds will need to be sourced as well.

Public Banks Can Implement Public Policy Instruction.

As an institution, a National Public Bank helps grow the community through loans that support people and the economy. At first, communities in need of assistance can grow. With this system, every public policy priority is examined, tested in beta, and implemented in real time. If successful solutions are identified within one community, their strategy for success could be shared with other communities. Different approaches may be tried simultaneously should the need arise, and each community can be used as a test site for public policy.

Public Banks can be used as a political counterweight.

The concept of a National Public Bank is an effective tool for stabilizing communities at the local level. It enables residents to create the community within which they want to reside. Wall Street money directs the government to policies that favor Wall Street’s American Dream; the American Dream of smaller communities needs to be considered since it is designed to remove value wherever it is rather than create it. Therefore, communities that do not have an existing source of income are seen as a risky investment and are obliterated.

Suppose a public bank is filled with taxpayers’ cash. In that case, all communities can gain the right to vote since economic power is a form of power. Suppose a bank has all the funds, and the money is invested in each other. In that case, it connects all of the community’s economic fortunes, and any community that is not successful effectively becomes an expense to the entire cost. Therefore, not only would each American in every community be represented in the political arena and represented, but every American would have an economic stake in ensuring that each community is successful.

The significance of the National Public Bank will always remain since its mission will be to fulfill the constitution’s commitment to enhance the general well-being of the populace. It needs to be clarified if the products and products Wall Street is selling would be of any use in the near future; however, should the market referred to as free is allowed to operate without subsidies, the question will soon be solved.

Public Banks Provide Oversight on Mega-Banks. They also oversee mega-banks.

The National Public Bank’s main objective is to collect all the money it generates based on a fixed “federal funds rate” of 4%. This means the bank must ensure that Wall Street will have to take out loans and repay the money it requires to operate its business. This would make the market a free market that the private sector wants. 

Without a safety net under the hood, those who put their money at risk are at too much risk of failing and being absorbed into the National Public Bank, so private banks eventually are either defunct or transformed into something that people continue to recourse. For instance, if Wall Street returns to its origins as a pure gambling establishment, the current tax laws do not permit players to deduct their operating losses or spread their losses over the next few years and, in the end, make it more difficult for gamblers to enter safer ventures as their losses will not be a burden to us all.

Summary

Put simply, a National Public Bank is the People’s Bank. It’s the Taxpayer’s Bank. It’s the Main Street Bank. It’s an institution that is the Bank of the Real Economy. It will eventually become the tool to implement policies on a community-wide level, in real-time, and the only policy that American citizens have ever required is that of government promoting their overall welfare.

Join us in our effort to restore the Constitutional model of the concept of money, which allows taxes to flow through the National Public Bank and straight back to our communities. This will tie our lives together, not because of our collective obligation to a greater authority, but rather to the common value of our shared passion, energy, and ingenuity. Simply by talking about it, you will help introduce National Public Banks into the public conversation, where it is sure to resonate, and begin shaping a new–more sustainable–narrative.